How much money do you think you spend on your vehicle? A few hundred dollars per month, maybe? If you financed your car, sure, you may have a car payment in the $300, $400, or even $500 range.
Data published on CNBC indicates that typical car borrowers are spending in excess of $27,000 on vehicles these days. According to Bankrate’s auto loan calculator, a $27,000 car creates a monthly payment of around $485 if you finance for 5 years at a 3 percent interest rate. That’s really and truly a lot of money, as $485 is enough for a one room apartment in some areas of the country. This is also around 11 percent of the monthly median household income.
In addition to a hefty car payment, we also to pay for other vehicle-related costs like auto insurance. If you live in a Iowa, for instance, your insurance costs are going to average around $630 per year — significantly lower than if you live in Missouri, where they’ll average closer to $1,100.
The same goes for repairs. Most of us pay between $300 and $400 per year for repairs, but in a few states like Vermont and West Virginia, repair costs are generally lower. Then, of course, we can’t forget our gasoline cost, which for some drivers is the highest vehicle-related costs.
Sure, these are cost that we consider, but we may not calculate the exact dollar amounts of these expenses regularly. Bankrate just released its Car Ownership study, breaking down the cost of car-ownership by state (which you can view here.) Check out the states with the most expensive ownership costs, and information on how to save on these costs.
Total: $2,372 per year or $198 per month
5. New Jersey
States Where Costs Are the Lowest
At $1,942, Iowa is the most inexpensive place to own and operate a vehicle. In Iowa, repairs average $315 annually and insurance costs are also low at $630 per year. The majority of Iowa’s vehicle ownership costs come in the form of fuel costs, as the average annual price of fuel exceeds the combined costs of insurance and repairs put together.
Notice how in Pennsylvania — another lower cost state — average insurance premiums are much higher, and fuel and repair costs are lower. The combined costs in the ten states within the chart, however, are lower than they are across the rest of the nation.
How to Save
- Carpooling to work is an effective way to reduce fuel costs, while also lowering total mileage on your vehicle. You can also report lower mileage to your insurance provider and save a few bucks there also.
- Take advantage of any and all discounts from your insurance provider. You may be eligible for multi-car, auto-pay, or alumni discounts that can put a pretty significant dent in your rate.
- Frequently change your oil and complete all necessary maintenance on your vehicle. You’ll save on fuel costs and make your car last longer.
- Research local mechanics and find the best deal when your car needs work. Check places like Angie’s List and Yelp for a quality mechanic at a fair price.